U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
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QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2004, 2004
Commission File No: 000-49998
Nano Chemical Systems Holdings, Inc.
(Exact name of small business issuer as specified in its charter)
NEVADA 33-0675154
(State or other Jurisdiction of (I.R.S Employer
Incorporation or Organization) Identification No.)
P.O Box 10591, Portland, Oregon 97296
(Address of Principal Executive Offices) (Zip Code)
(503) 236-7171
(Issuer's telephone number, including area code)
Heritage Scholastic Corporation
(Former name, address and fiscal year, if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
Yes /X/ No
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a court.
Yes /X/ No
As of February 21, 2005, 67,678,500 shares of the registrants Common Stock
were outstanding.
Transitional Small Business Format. Yes No /X/
HERITAGE SCHOLASTIC CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2004
(UNAUDITED)
HERITAGE SCHOLASTIC CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
PAGE 1 CONDENSED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2004
(UNAUDITED)
PAGE 2 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
THREE AND SIX MONTHS ENDED DECEMBER 31, 2004 AND 2003 AND
FOR THE PERIOD FROM JULY 30, 1999 (INCEPTION) TO DECEMBER
31, 2004 (UNAUDITED)
PAGES 3 - 4 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM JULY 30, 1999 (INCEPTION) TO DECEMBER
31, 2004 (UNAUDITED)
PAGE 5 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX
MONTHS ENDED DECEMBER 31, 2004 AND 2003 AND FOR THE PERIOD
FROM JULY 30, 1999 (INCEPTION) TO DECEMBER 31, 2004
(UNAUDITED)
PAGES 6 - 9 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
HERITAGE SCHOLASTIC CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2004
-----------------------
(UNAUDITED)
ASSETS
------
Deposits $ 100
-----------------
TOTAL ASSETS $ 100
=================
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued expense 1,633
Wages payable and related taxes 71,314
Income taxes payable 1,600
Deferred revenue 4,240
Stockholder loans 68,359
-----------------
TOTAL CURRENT LIABILITIES 147,146
COMMITMENTS AND CONTINGENCIES --
STOCKHOLDERS' DEFICIENCY
Preferred stock, $0.001 par value, 20,000,000 shares authorized,
none issued and outstanding --
Common stock, $0.001 par value, 100,000,000 shares authorized,
31,678,500 shares issued and outstanding 31,680
Additional paid in capital 93,172
Accumulated deficit during development stage (271,898)
-----------------
Total Stockholders' Deficiency (147,046)
-----------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 100
=================
See accompanying notes to condensed consolidated financial statements.
1
HERITAGE SCHOLASTIC CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
(UNAUDITED)
For The
Period From
For The Three For The Three For The Six For The Six July 30, 1999
Months Ended Months Ended Months Ended Months Ended (Inception) To
December 31, December 31, December 31, December 31, December 31,
2004 2003 2004 2003 2004
------------ ------------ ------------ ------------ ------------
REVENUES $ -- $ -- $ -- $ -- $ 8,400
COST OF SALES -- -- -- -- 7,919
------------ ------------ ------------ ------------ ------------
GROSS PROFIT -- -- -- -- 481
OPERATING EXPENSES
General and administrative 899 31,126 2,326 45,355 270,779
------------ ------------ ------------ ------------ ------------
Total Operating Expenses 899 31,126 2,326 45,355 270,779
------------ ------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (899) (31,126) (2,326) (45,355) (270,298)
Provision for Income Taxes -- -- -- -- 1,600
------------ ------------ ------------ ------------ ------------
NET LOSS (899) (31,126) (2,326) (45,355) (271,898)
============ ============ ============ ============ ============
Net loss per share - basic and diluted $ -- $ -- $ -- $ -- $ --
============ ============ ============ ============ ============
Weighted average number of shares outstanding
during the period - basic and diluted 31,679,500 31,675,500 31,679,500 31,675,500 28,734,994
============ ============ ============ ============ ============
See accompanying notes to condensed consolidated financial statements.
2
HERITAGE SCHOLASTIC CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM JULY 30, 1999 (INCEPTION) TO DECEMBER 31, 2004
------------------------------------------------------------------
(UNAUDITED)
Additional
Preferred Stock Common Stock Paid-In
Shares Amount Shares Amount Capital
------- -------- ---------- ---------- ----------
Balance at July 30, 1999 and June 30, 2000 - $ -- -- $ -- $ --
------- -------- ---------- ---------- ----------
Common stock issued for shareholder note
receivable ($0.00025 per share) - -- 22,000,000 22,000 (16,500)
Common stock issued for shareholder note
receivable ($0.00075 per share) - -- 2,400,000 2,400 (600)
------- -------- ---------- ---------- ----------
Balance at June 30, 2001 - -- 24,400,000 24,400 (17,100)
Common stock issued for cash ($0.01 per share) - -- 2,722,500 2,723 24,503
Common stock issued for cash ($0.025 per share) - -- 2,233,000 2,233 53,592
Common stock issued for services
($0.025 per share) - -- 1,120,000 1,120 26,880
Direct costs of stock offering - -- -- -- (42,745)
Fair value of stock options issued to non-employees - -- -- -- 5,700
Collection of shareholder notes receivable - -- -- -- --
Net loss for the year ended June 30, 2002 - -- -- -- --
------- -------- ---------- ---------- ----------
Accumulated
Deficit During
Shareholder Accumulated
Notes Development
Receivable Stage Total
---------- ---------- ----------
Balance at July 30, 1999 and June 30, 2000 $ -- $ -- $ --
---------- ---------- ----------
Common stock issued for shareholder note
receivable ($0.00025 per share) (5,500) -- --
Common stock issued for shareholder note
receivable ($0.00075 per share) (1,800) -- --
---------- ---------- ----------
Balance at June 30, 2001 (7,300) -- --
Common stock issued for cash ($0.01 per share) -- -- 27,226
Common stock issued for cash ($0.025 per share) -- -- 55,825
Common stock issued for services
($0.025 per share) -- -- 28,000
Direct costs of stock offering -- -- (42,745)
Fair value of stock options issued to non-employees -- -- 5,700
Collection of shareholder notes receivable 7,300 -- 7,300
Net loss for the year ended June 30, 2002 -- (27,775) (27,775)
---------- ---------- ----------
See accompanying notes to condensed consolidated financial statements.
3
HERITAGE SCHOLASTIC CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM JULY 30, 1999 (INCEPTION) TO DECEMBER 31, 2004
------------------------------------------------------------------
(UNAUDITED)
Additional
Preferred Stock Common Stock Paid-In
Shares Amount Shares Amount Capital
------- -------- ---------- ---------- ----------
Balance at June 30, 2002 - -- 30,475,500 30,476 50,830
Common stock issued for cash ($0.025 per share) - -- 200,000 200 4,800
Common stock issued for cash ($0.025 per share) - -- 200,000 200 4,800
Common stock issued for services($0.025 per share) - -- 800,000 800 19,200
Fair value of stock options issued to non-employees - -- -- -- 10,000
Net loss for the year ended June 30, 2003 - -- -- -- --
------- -------- ----------- ----------- -----------
Balance at June 30, 2003 - -- 31,675,500 31,676 89,630
Common stock issued for cash ($0.025 per share) - -- 4,000 4 96
Fair value of stock options issued to non-employees - -- -- -- 3,284
Net loss for the year ended June 30, 2004 - -- -- -- --
------- -------- ----------- ----------- -----------
Balance at June 30, 2004 - -- 31,679,500 31,680 93,010
Fair value of stock options issued to non-employees - -- -- -- 162
Net loss for the period ended December 31, 2004 - -- -- -- --
------- -------- ----------- ----------- -----------
Balance at December 31, 2004 - $ -- 31,679,500 $ 31,680 $ 93,172
======= ======== =========== =========== ===========
Accumulated
Deficit During
Shareholder Accumulated
Notes Development
Receivable Stage Total
----------- ----------- -----------
Balance at June 30, 2002 -- (27,775) 53,531
Common stock issued for cash ($0.025 per share) -- -- 5,000
Common stock issued for cash ($0.025 per share) -- -- 5,000
Common stock issued for services($0.025 per share) -- -- 20,000
Fair value of stock options issued to non-employees -- -- 10,000
Net loss for the year ended June 30, 2003 -- (136,807) (136,807)
----------- ----------- -----------
Balance at June 30, 2003 -- (164,582) (43,276)
Common stock issued for cash ($0.025 per share) -- -- 100
Fair value of stock options issued to non-employees -- -- 3,284
Net loss for the year ended June 30, 2004 -- (104,990) (104,990)
----------- ----------- -----------
Balance at June 30, 2004 -- (269,572) (144,882)
Fair value of stock options issued to non-employees -- -- 162
Net loss for the period ended December 31, 2004 -- (2,326) (2,326)
----------- ----------- -----------
Balance at December 31, 2004 $ -- $ (271,898) $ (147,046)
=========== =========== ===========
See accompanying notes to condensed consolidated financial statements.
4
HERITAGE SCHOLASTIC CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(UNAUDITED)
For The
Period From
For The Six For The Six July 30, 1999
Months Ended Months Ended (Inception) To
December 31, December 31, December 31,
2004 2003 2004
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (2,326) $ (45,355) $(271,898)
Adjustments to reconcile net loss to net cash used in
operating activities:
In-kind contribution of services 162 1,642 39,146
Impairment of capitalized publishing costs -- -- 15,341
Changes in operating assets and liabilities:
Increase in accounts receivable 600 2,700 --
Increase in prepaid expense -- -- (100)
Increase in accounts payable and accrued expenses (7,660) 5,166 1,634
Increase in wages and related taxes payable (4,651) 20,231 71,314
Increase in income taxes payable -- -- 1,600
Increase in deferred revenues (7,760) 8,320 4,240
--------- --------- ---------
Net Cash Used In Operating Activities (21,635) (7,296) (138,723)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalized publishing costs -- -- (15,341)
--------- --------- ---------
Net Cash Used In Investing Activities -- -- (15,341)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock -- 100 85,705
Proceeds from issuance of loan payable - related party 21,090 -- 68,359
Net change in advances - related party -- 7,767 --
--------- --------- ---------
Net Cash Provided By Financing Activities 21,090 7,867 154,064
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH (545) 571 --
CASH AT BEGINNING OF PERIOD 545 847 --
--------- --------- ---------
CASH AT END OF PERIOD $ -- $ 1,418 $ --
- --------------------- --------- --------- ---------
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
- -----------------------------------------------------------------------
Cash paid for income taxes $ -- $ -- $ --
Cash paid for interest expense $ -- $ -- $ --
========= ========= =========
See accompanying notes to condensed consolidated financial statements.
5
HERITAGE SCHOLASTIC CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2004
-----------------------
(UNAUDITED)
NOTE 1 BASIS OF PRESENTATION
- ------ ---------------------
The accompanying condensed consolidated financial statements of
Heritage Scholastic Corporation ("the Company"), a Nevada corporation.
In the opinion of management, the condensed financial statements
reflect all normal and recurring adjustments, which are necessary for a
fair presentation of the Company's financial position, results of
operations and cash flows as of the dates and for the periods,
presented. The condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information. Consequently, these statements do
not include all disclosures normally required by generally accepted
accounting principles of the United States of America for annual
financial statements nor those normally made in an Annual Report on
Form 10-KSB. Accordingly, reference should be made to the Company's
Form 10-KSB, for the year ended June 30, 2004, filed on October 1,
2004, with the U.S. Securities and Exchange Commission for additional
disclosures, including a summary of the Company's accounting policies,
which have not materially changed. The results of operations for the
periods ended December 31, 2004 are not necessarily indicative of
results that may be expected for the fiscal year ending June 30, 2005
or any future period, and the Company makes no representations related
thereto
The accompanying condensed consolidated financial statements as of
December 31, 2004 have been prepared assuming the Company will continue
as a going concern. The Company had negative working capital of
$147,148 as of December 31, 2004, and incurred a net loss for the six
month period ended December 31, 2004 and period from inception to
December 31, 2004 of $2,326 and $271,898, respectively. These
conditions raise substantial doubt about the Company's ability to
continue as a going concern. The Company's primary focus is raising
capital. There is no assurance that additional debt and equity
financing needed to fund operations will be consummated or obtained in
sufficient amounts necessary to meet the Company's needs. See Note 6
The accompanying condensed financial statements do not include any
adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and
classification of liabilities that may result from the possible
inability of the Company to continue as a going concern.
The preparation of condensed consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosures of contingent
assets and liabilities and the results of operations during the
reporting period. Actual results could differ materially from those
estimates.
6
HERITAGE SCHOLASTIC CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2004
-----------------------
(UNAUDITED)
NOTE 2 SIGNIFICANT ACCOUNTING POLICIES
- ------ -------------------------------
These condensed consolidated financial statements do not include the
complete list of significant accounting policies, reference should be
made to the Company's Form 10-KSB filed on October 1, 2004 for a more
complete description of the relevant accounting policies.
These condensed consolidated financial statements include the accounts
of its wholly owned subsidiary, Books for Kids, Inc. (a Nevada
Corporation). Books for Kids, Inc. was incorporated on February 21,
2003. All material intercompany transactions have been eliminated in
consolidation.
Supplies inventory consists of operating supplies and are stated at
lower of cost or market as determined by the first-in, first-out
method.
Deferred income taxes are recognized for the tax consequences in future
periods of differences between the tax basis of assets and liabilities
and their financial reporting amounts at each period end based on
enacted tax laws and statutory tax rates applicable to the periods in
which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized.
As of December 31, 2004 a current deferred tax asset of approximately
$108,000 had been recognized for the temporary differences related to
net operating losses carried forward. A valuation allowance of
approximately $108,000 has been recorded to fully offset the deferred
tax asset, as it is not more likely than not that the assets will be
utilized. The Federal net operating losses of approximately $271,000
begin to expire in 2022 and the state net operating losses of
approximately $271,000 begin to expire in 2011, unless previously
utilized.
California law imposes a franchise tax of 1.5% of taxable income on
companies doing business in the state with a certain minimum amounts
per year.
NOTE 3 LOAN FROM SHAREHOLDER
- ------ ---------------------
Since its inception, the Company has received various services related
to day to day operations from related entities, HMC, Parks Family, LLC
and Imprint Publications, LLC, which entities are wholly owned by
Charles E. and Lori M. Parks, who are officers, directors and
shareholders of HSC. The note payable represents the balance due for
these services as well as advances made by these companies to HSC, and
is due on demand.
7
HERITAGE SCHOLASTIC CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2004
-----------------------
(UNAUDITED)
NOTE 4 RECENT ACCOUNTING PRONOUNCEMENTS
- ------ --------------------------------
There were no recent Accounting Pronouncements that affect the Company
during the first quarter ended December 31, 2004. For past
pronouncements please refer to the Company's 10-KSB filed October 1,
2004.
NOTE 5 COMMON STOCK
- ------ ------------
On July 1, 2000 the Company issued 22,000,000 shares of common stock to
the Company's founders at $0.00025 per share for a note receivable that
was repaid in the year ended June 30, 2002.
On September 29, 2000 the Company issued 2,400,000 shares of common
stock to a key officer of the Company at $0.00075 per share for a note
receivable that was repaid in the year ended June 30, 2002.
On September 14, 2001 the Company issued 2,722,500 shares of common
stock to various investors for cash of $0.01 per share.
On June 30, 2002 the Company issued 2,233,000 shares of common stock in
a Nevada-registered offering filed under Rule 504 of Regulation D of
the Securities Act of 1933 to various investors for cash of $0.025 per
share.
Related to the shares issued on June 30, 2002 the Company issued
1,100,00 shares to a stock offering consulting firm and 20,000 shares
to an individual for work performed on the stock offering. These shares
were valued at the stock-offering price of $0.025 per share, or
$28,000. The shares issued to the consulting firm were in addition to
cash fees under an agreement for various stock offering services.
The Company incurred a total of approximately $43,000 in direct costs
related to above common stock offering, inclusive of the shares issued
for services issued at a fair value of $28,000.
On November 27, 2002 the Company issued 200,000 shares of common stock
to an investor for cash of $0.025 per share.
On February 8, 2003 the Company issued 200,000 shares of common stock
to an investor for cash of $0.025 per share.
On March 30, 2003 the Company issued 800,000 for services performed
with a fair value of $5,000 ($0.025 per share).
8
HERITAGE SCHOLASTIC CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2004
-----------------------
(UNAUDITED)
On December 31, 2003, the Company issued 4,000 shares of common stock
to an investor for cash of $0.025 per share.
NOTE 6 SUBSEQUENT EVENT
- ------ ----------------
(A) Stock Exchanged for Interest in Subsidiary
----------------------------------------------
During January 2005, a stockholder of the company received 100% of the
common stock of books for Kids, Inc. in consideration for assuming the
liabilities of the subsidiary.
(B) Acquisition Agreement
--------------------------
On January 27, 2005, The Company consummated an agreement with Nano
Chemical Systems, Inc., pursuant to which Nano Chemical Systems, Inc.
exchanged all of its common stock for (36,000,000 post split) 9,000,000
shares or approximately 22% of the common stock of the Company. The
Company has accounted for the transaction as a combination of entities
under common control and accordingly, recorded the merger at historical
cost.
(C) Forward Stock Split
-----------------------
On February 7, 2005, the Company effectuated a 4-1 forward stock split
on all issued and outstanding shares of common stock. Per share and
weighted average share amounts have been retroactively restated in the
accompanying consolidated financial statements and related notes to
reflect the forward split.
9
NANO CHEMICAL SYSTESM HOLDINGS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Item 2.
GENERAL
The information contained in Item 2 contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Actual results
may materially differ from those projected in the forward-looking statements as
a result of certain risks and uncertainties set forth in this report. Although
management believes that the assumptions made and expectations reflected in the
forward-looking statements are reasonable, there is no assurance that the
underlying assumptions will, in fact, prove to be correct or that actual results
will not be different from expectations expressed in this report.
RESULTS OF OPERATIONS
As of December 31, 2004, we have generated revenues of $8,400 of which none were
generated in the six-month period ended December 31, 2004. Even though we have
generated a small amount of revenue to-date, we continue to be a development
stage company as defined by SFAS 7, as our primary focus is raising capital and
attracting business. Accordingly, due to the Company's status as a development
stage company, negative working capital, and continued losses, our independent
public accountants have issued a comment regarding our ability to continue as a
going concern (please see footnote 1 of the condensed consolidated financial
statements). The company has been focused on selling books in only the Los
Angeles area with plans to expand into other markets once it had substantial
success in Los Angeles.
Expenses during the second quarter of this year were approximately $900 compared
with approximately $31,000 for the same quarter last year. In the quarter ended
December 31, 2004 most of the expenses were bank fees and rent. In the same
quarter last year the largest expenses were accrued salaries and wages. Given
the company's current financial position, it stopped accruing salaries for the
officers.
LIQUIDITY AND CAPITAL RESOURCES
The accompanying condensed consolidated financial statements as of December 31,
2004 have been prepared assuming the Company will continue as a going concern.
However, the Company had negative working capital of $147,046 as of December 31,
2004, and incurred a net loss for the three-month period ended December 31,
2004, 2004 and period from inception to December 31, 2004 of $899 and $270,779,
respectively. These conditions raise substantial doubt about the Company's
ability to continue as a going concern.
As of December 31, 2004, we had $100 in deposit and no receivables. During the
second quarter, the Company raised no additional capital. Due to our limited
assets and projected cash flows, awe did not believe that we had sufficient
capital to implement our plan to place our textbooks throughout the targeted
school districts.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
There were no recent Accounting Pronouncements that effect the Company during
the quarter ended December 31, 2004. For past pronouncements please refer to the
Company's 10-KSB filed October 1, 2004.
SUBSEQUENT EVENT
On January 25, 2005, pursuant to the terms of a Stock Purchase Agreement,
Katrina Cleburn purchased 6,531,625 shares of the Company's issued and
outstanding common stock from certain shareholders of the Company. The 6,531,625
shares represented a majority of the Company's outstanding common stock. As part
of the Acquisition and pursuant to the Stock Purchase Agreement, the following
changes to the Company's directors and officers have occurred:
o Charles Parks resigned as the Company's President and Chief Executive
Officer; Randall Peterson resigned as the Company's Chief Financial
Officer and Treasurer; and Lori Parks resigned as the Company's Vice
President and Secretary, effective January 25, 2005.
o Katrina Cleburn was appointed as the Company's President, Chief
Executive Officer, Chief Financial Officer, and Secretary as of
January 25, 2005.
o Further, Katrina Cleburn was appointed as the sole member of the Board
of Directors of the Company.
o Charles Parks, Randall Peterson, and Lori Parks then resigned as
members of the Board of Directors of the Company.
On January 27, 2005 pursuant to an Asset Purchase Agreement and Share Exchange
and amendment there to we purchased all of the outstanding shares of Nano
Chemical Systems, Inc., a Nevada Corporation, in consideration for the issuance
of a total of 9,000,000 restricted common shares to shareholders of Nano
Chemical Systems, Inc. Pursuant to the Agreement, all of the Company's shares
issued in this transaction are subject to a Lock-Up Agreement, and therefore
shall be held in escrow for a period of one year. The acquisition was approved
by the unanimous consent of our Board of Directors on January 27, 2005. Pursuant
to the Agreement, Nano became a wholly owned subsidiary of the Company. Nano
owns the following three patent applications:
o Assignment for invention entitled: Method for Separating and Enhancing
Photoactive Nanoparticles for UV Protection
o Assignment for a provisional application entitled: Preservation of
Narrow Nano-Size Distribution of Particles
o Assignment for a provisional application entitled: Semi-conductive
Nanoparticulates Enhanced Surface Appearance
These three patent applications in progress cover technology for manufacturers
products containing nanoparticulates for protection of fabric and wooden
surfaces from UV radiation and SparklerTM , which when applied to metallic
surfaces is transparent and colorless to visible light. SparklerTM both protects
the surface from UV energy and enhances the appearance of surfaces. There are no
environmental issues associated with these products. The Company anticipates
that these products will have significant economic value when sold with waxes
for cars and furniture and with indoor and outdoor paints and coatings for wood
and metal.
In addition, pursuant to the terms of the Agreement, all of the assets and
liabilities of the Company's subsidiary, Books for Kids was spun off to Randall
Peterson.
On February 7, 2005, 2005, the Company effectuated a 4-1 forward split of the
Company's issued and outstanding shares.
Item 3. Controls and Procedures
- -------------------------------
(a) Evaluation of disclosure controls and procedures.
Our Chief Executive Officer and Chief Financial Officer (collectively the
"Certifying Officers") maintain a system of disclosure controls and procedures
that is designed to provide reasonable assurance that information, which is
required to be disclosed, is accumulated and communicated to management timely.
Under the supervision and with the participation of management, the Certifying
Officers evaluated the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rule [13a-14(c)/15d-14(c)]
under the Exchange Act) within 90 days prior to the filing date of this report.
Based upon that evaluation, the Certifying Officers concluded that our
disclosure controls and procedures are effective in timely alerting them to
material information relative to our company required to be disclosed in our
periodic filings with the SEC.
(b) Changes in internal controls.
Our Certifying Officer has indicated that there were no significant changes in
our internal controls or other factors that could significantly affect such
controls subsequent to the date of his evaluation, and there were no such
control actions with regard to significant deficiencies and material weaknesses.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is currently not a party to any pending legal proceedings and
no such action by, or to the best of its knowledge, against the Company has been
threatened.
Item 2. Changes in Securities and Small Business Issuer Purchase Of Equity
Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8K.
(a) Exhibits
31.1 Certification pursuant to Section 302 of Sarbanes Oxley Act of
2002
32.1 Certification pursuant to Section 906 of Sarbanes Oxley Act of
2002
(b) Reports on Form 8K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NANO CHEMICAL SYSTEMS HOLDINGS, INC.
(Registrant)
Date: February 21, 2005 By: /s/ Katrina Cleburn
----------------------------------
Katrina Cleburn,
Chief Executive Officer
And Chief Financial Officer